A Study On The Inventory Problem In China’s Clothing Industry

The apparel industry has long been a pillar industry of China, export of clothingproducts account for large percents in China’s foreign trade. Especially in thesoutheast coastal areas, the light industry is highly developed, represented by thetextile and garment industry. The apparel industry, which makes good use of China’sfactor endowments like labor and resources, has been playing an irreplaceableimportant role in developing international trade and domestic economy, as well assolving the employment problem in China. The apparel industry has experienced rapiddevelopment and growth since the reform and opening, with the advent of economictransition, this industry began to slow down and serious problem of overcapacity hasemerged, just like other industries in China.In the background of a weak global economy, together with the excess capacityin most of the domestic industries, China’s apparel industry experienced a tough timeduring recent years. Three factors brought high inventory to the apparel indus try, first,garment enterprises expanded rapidly to compete for channels in the past years.Second, both the domestic and foreign markets have been trapped in a depressionsince2008. Third, the majority of domestic garment companies have some problemsin management and operation. This paper conducts a research on the inventoryproblem of China’s garment industry, after analysing inventory status in the industry,the author tries to dig the internal and external reasons for the high inventory and givecorresponding solutions. The first part of the paper discusses the involved theories ofthe inventory issues of apparel industry, finding that the "bullwhip effect" in thesupply chain which largely amplified market demand is one of the key causes ofexcess inventory. And to some extent, Toyota’s JIT production theory can be useful inimproving the accuracy of material and information transfer in the supply chain.Considering the product life cycle theory and the economic order quantity model,clothing enterprises should adopt different strategies for marketing and promotion indifferent stages, and maintain a reasonable amount of inventory with a cost as smallas possible. Then, from general to specific, this paper analyses the overall status andreasons of inventory problem in apparel industry, after that, the author choosesMetersbonwe to launch a detailed analysis, trying to explore practical problemstypical in apparel industry and measures Metersbonwe take. Finally, conclusions are given with both internal and external reasons for the excess inventory issue, andaccordingly suggestions are given in five aspects, from market analysis andforecasting, supply chain development, e-commerce, marketing strategy and mode ofoperation.